The European Union will soon move forward with a financial transaction tax (FTT), European Commission President Jose Manuel Barroso said Monday, as he also spoke in favour of Euro-bonds.
The FTT, also known as Tobin tax after the US economist who first proposed a version of it in the 1970s, would impose a levy on sales of stocks, bonds and derivatives.
I expect the European Union to reach a conclusion soon that would allow an FTT to move closer to realization in Europe and inspire a global solution, Barroso said before the start of the Group of 20 (G20) summit in Los Cabos, Mexico.
We want the financial transaction tax to become a reality in Europe, and if possible at global level, Barroso added, suggesting it could fund development aid for poorer countries.
The United States has stymied attempts to introduce the measure at G20 level, arguing that taxing the financial sector might be counterproductive, while non-euro members such as Britain and Sweden have blocked EU progress on the issue using similar arguments.
But a commission spokeswoman said last week that a Euro-zone-only solution for the tax might be decided at an EU finance ministers’ meeting on Friday.
A pledge to push ahead with the tax was key to the German government winning opposition support for the parliamentary approval of a new Euro-zone rescue fund and a budget discipline treaty known as the fiscal compact.
In Los Cabos, Barroso also said that the joint issuance of debt, or so-called Euro bonds, should be part of a long term solution to the Euro zone debt crisis, albeit under strict conditions.
Some form of debt mutualization will be considered, but let me be very clear, any future Euro-bonds ... will not be a licence to spend, on the contrary they will become a powerful tool for increased discipline and stability, he said.
In the shorter term, the EU will work on a banking union, Barroso said, confirming that the commission will present proposals on joint deposit guarantee and bank resolution schemes, as well as on integrated banking supervision, later this year.
On Greece, he dismissed suggestions that the country‘s deficit reduction targets could be softened under a renegotiated bailout deal, but suggested that the country could be helped in other ways.
When I listen to all the leaders around Europe, I see that there is a willingness also to do more to support Greece in terms of growth-enhancing measures ... provided of course that Greece respects commitments that have been already taken, Barroso said.